19 Nov 2020 13:12

Russian GDP decline in Q4 could quicken to 5% or more from 3.6% in Q3 - CBR

MOSCOW. Nov 19 (Interfax) - The decline in Russian GDP in Q4 2020 could quicken to 5% or even more from 3.6% in Q3, said Kirill Tremasov, Director of the Central Bank of Russia (CBR) Monetary Policy Department at a joint meeting of the financial industry commissions of the Russian Union of Industrialists and Entrepreneurs (RSPP).

"The estimate suggests that in Q4, the trends will somewhat deteriorate. I said that Q3 was minus 3.6%. In the fourth quarter, we are likely to see minus 5%, maybe even a little more," Tremasov said.

The Central Bank is expecting the pause in the recovery of the global and Russian economy to last until spring 2021, after which growth will continue. "So far, in our baseline scenario, we are factoring in a pause until the spring and then continued recovery," Tremasov said.

"The recovery that we have seen in Q3, it really was a strong one, in terms of consumer demand, especially in retail, we actually returned to pre-crisis levels, although there is significant slump in services and the recovery will take longer. This sharp recovery, supported by both fiscal and monetary policies, is now entering a pause due to the impact of the second wave of the pandemic. And the impact is being conveyed both through external and internal channels," Tremasov added.

In its baseline forecast, the CBR is not factoring in the scenario of a harsh lockdown as in Q2, he said. "Nevertheless, the growth of epidemiological risks in itself prompts certain self-limitation effects, which manifest in a decrease in consumer activity. This is seen first and foremost in the services sector, with the impact on the retail sector less pronounced. This pause is present in both the world and the Russian economy. It is likely to last until next spring," Tremasov said.

"Of course, a very big role will be played by the factor of vaccines. If the vaccination process becomes sustainable by the middle of next year and it becomes clear that it works, then, of course, in H2 next year we may see a wave of acceleration in this recovery," the head of the department said.